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Many foreign stocks offer higher dividend yields than their U.S. counterparts. For example, Telecom Corp. of New Zealand doles out a voluptuous 7.2% dividend, versus U.S.-based AT&T's still respectable, but smaller, 4.6%.

Not all created equalDespite the tremendous opportunities available to generate income from companies abroad, stateside investors need to know about a couple of things before stamping their passports:

Dividend regularity -- or lack thereof. Foreign-company dividends can indeed be larger than U.S. companies', but they're often less regular in timing and amount. Companies abroad like to pay a target percentage of earnings, instead of a certain cash value every year. Don't knock it: Freed from the pressure to lowball their payouts, these companies can pay you more over the long haul.

Dividend taxation. Foreign countries (except for those in the U.K.) can scalp you at their going rate. Still, most countries in which you're likely to invest have tax treaties with the United States, so you can claim a credit for the tax withheld. But here's the rub: Because a credit offsets taxes you would have otherwise paid, it's smart to hold foreign stocks in a taxable account. In other words, skip the IRA if you're going abroad.

Of course, not all foreign dividend stocks are created equal. So each week, we'll highlight a five-star foreign dividend payer with the assistance of the 84,000 investors participating in Motley Fool CAPS, the Fool's free investing community. After all, having a second (or 300th!) pair of eyes can help you separate the wheat from the chaff.

Ride the frozen rails, eh?Do you feel like you've missed the boat on some of the year's best commodity stocks, like Consol Energy(NYSE:CNX), Mosaic(NYSE:MOS), or AK Steel(NYSE:AKS)? Missing the boat on hot stocks is always a hard pill to swallow, but have no fear -- the Canadians are here with a promising stock for you to consider.

Canadian National Railway(NYSE:CNI) is in the business of moving these commodities and others across North America. In fact, it's the only railroad which connects the continent east-west and north-south, linking Canada, Mexico and the United States. Its connectivity is one of its main competitive advantages, as it allows U.S. and Canadian exporters and importers alike to seamlessly transport raw materials and finished goods to and from China.

On the dividend front, the stock yields 1.7%. While that dividend yield won't blow your socks off, keep in mind that foreign companies generally pay out a percentage of profits, instead of a target dollar amount (as mentioned above). Moreover, CNI's payout ratio stands at just 19%, which gives it plenty of room to grow its dividend. Yet when a company is posting 21.6% return on equity like CNI is, you don't mind as much if it hangs on to more of your money to find the best growth opportunities.

How will CNI perform going forward? Last month, CAPS player pigsfeet007 informed the community of increased import-export activity at one of Canada's largest ports: "Canada's Prince Rupert port is slammed with goods from China and there is a bottleneck that has been created in trying to move these goods to the U.S. This has led to big gains in the dry shipping sector and Canada's major ports have plans for major expansions over the next few years."

This is where CNI's competitive advantage comes into play -- CNI's extensive network links Prince Rupert port across Canada to Halifax and down the Mississippi to New Orleans.

With 338 of 343 CAPS players believing that Canadian National Railway will outperform the S&P 500 going forward, it's hard to find many bearish opinions. But of the few CNI bears on CAPS, player NicieNicie makes a very lucid argument against the shape of the company's rail network:

"CNI has a unique "Y" shaped major route structure (Maritimes-Montreal-Toronto-Vancouver with connections to Chicago, where it owns the old main line of the Illinois Central down to New Orleans). As they like to say, tri-coastal: Atlantic, Pacific and Gulf. Yet this exclusivity is not as significant as it sounds. Three of the remaining five big 'Class One's' can get you to New Orleans; and there are more efficient ways to route rail traffic transcontinentally due to various strategic alliances between the eastern and the western roads."

In this Fool's opinion, however, Canadian National Railway is definitely worth further research. With gas prices above $3 in most areas with no relief in sight, it becomes much more efficient and cost-effective for importers and exporters to use the rails instead of using trucks. CNI's management is also top-notch and engaged -- CEO E. Hunter Harrison has been in the railroad industry since 1963,when he started out as a carman-oiler during college. So stop by a Timmy's, turn on a hockey game, and do some due diligence on CNI.